TheStreet.com Ratings: Top 10 All-Around Value Stocks

Each weekday, TheStreet.com Ratings compiles a list of the top 10 stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publishes these lists on the Ratings section of our Web site.

The rankings are based on our ratings, which assess risk-adjusted returns, as well as other criteria specific to the type of stock.

We update the lists at the end of the business day on the basis of information available at the close of the previous trading session. The following day, we publish an article that takes a closer look at the ratings of the stocks on one of the lists.

Today we look at all-around value stocks. These stocks are in the top 50% of all stocks rated by our proprietary quantitative model, which looks at more than 62 factors. Other selection criteria for this particular category include annual revenue of at least $500 million; lower-than-average valuation, such as a price-to-sales ratio of less than 2; and leverage that is less than 49% of total capital.

Insurance and financial services company MetLife ( MET), which has merited a buy rating since December 2004. With a strong market position and growing international operations, the company is positioned for continued strong financial performance.

MetLife has bolstered its market position in the core insurance and annuity business with its acquisition of TIC, giving it one of the broadest distribution networks in the sector. Ongoing consolidation within the industry will lead to sustained growth. The risks to the buy rating include the negative impact of any changes in interest rates, equity prices and any slowdown of the economy.

Raytheon ( RTN) has been rated a buy since October 2004. Among the company's strengths is solid net income growth and steady revenue growth, led by higher sales of defense electronics and business jets. Moreover, Raytheon, the fifth-largest Pentagon contractor, should benefit from higher proposed defense spending as President Bush's 2007 budget continues to favor spending on defense and homeland security.

But with diversified holdings come diversified risks, and the buy rating is always threatened by litigation in the cigarette industry, catastrophic events on its insurance business or declining energy prices affecting its natural gas holdings.

Rated buy since November 2004, strong demand for computer maker Hewlett-Packard's ( HPQ) products has created robust top line growth, thanks in part to savvy acquisitions of complementary businesses. The company's focused restructuring initiatives are aimed at improving margins by reducing workforce and consolidating its real estate portfolio, which can be considered a success so far. Plus, the dark clouds hanging over the stock may be clearing with reports of plea negotiations in the company's boardroom spying scandal.

Given the fierce competition in the laptop, desktop and printer markets from rivals like Dell ( DELL) and Lexmark International ( LXK), H-P will continue to face constant pricing pressure and is likely to cut prices to preserve its formidable market share.

Rated buy since September 2004, FirstEnergy ( FE) generates, distributes and sells electric energy to around 4.5 million customers in Ohio, New Jersey and Pennsylvania. The company is currently increasing its power generation capacity, which it expects to bolster its financial performance going forward. Also, First Energy has a cost advantage over its competitors, as it generates electricity using nuclear power and coal, while its competitors use oil and gas.

However, the company is exposed to risks arising from the reliability of its power plants and transmission and distribution equipment, along with health and safety hazards in the case of its nuclear plants. Also, it could be significantly affected by any increase of interest rates or prices for commodities such as natural gas, energy transmission or coal.

Chevron ( CVX), rated buy since August 2004, is known as one of the "super-major" integrated oil companies. Strong global demand for petroleum resulted in record net income in the third quarter of $5 billion, an increase of $1.4 billion over the same period a year ago, and has allowed the company to invest $11.5 billion in expansion projects during the first three quarters alone.

But not all is sunny for Chevron. Civil unrest in Nigeria and Venezuela could hurt the company's production and affect its growth. Chevron also expects fourth-quarter profits to drop from its record level due to refinery maintenance and construction and decreased commodity prices.

Principal Financial Group ( PFG) sells retirement savings, investment and insurance products and services, and has warranted a buy rating since June 2004. The company celebrated the fifth anniversary of its IPO during its third quarter earnings report, which saw all-time highs in operating earnings, earnings per share and assets under management ($215 billion). The company's steady, if unspectacular, growth is expected to continue as the baby boomer generation continues to increase its spending on insurance and retirement planning.

Dominion Resources ( D) has merited a buy rating since November 2004. Its above-average return on equity, positive net income growth and impressive margins position it for continued success. However, future earnings could be negatively affected by Dominion's plan to sell the majority of its oil and natural gas exploration and production segments, and operational efficiency is always at the mercy of the weather.

Steel products manufacturer and recycler Nucor ( NUE) has been rated buy since January 2005. The company enjoyed a stellar 81% EPS growth in the fourth quarter of 2006, and its stock price jumped more than 56% for the year to Jan. 5, thanks to impressive increases in net income and revenue growth.

These strengths outweigh Nucor's weak operating cash flow.

Rated buy since October 2004, Johnson Controls ( JCI) manufactures installed building control systems and technical and facility management services. It also designs and assembles products and systems for passenger cars and light trucks, as well as advanced battery technology.

The buy rating is supported by the company's recent acquisitions, moves to reduce dependency on the American auto industry, and restructuring exercises that have boosted margins and lifted cash flow. However, a significant economic slump would cause American automakers -- which contributed 32% to the company's 2006 sales -- to scale back production, and in turn, reduce demand for Johnson's products.